STATEMENT: On President Trump's ACA-Killing Actions

Marc Stier, Director of the PA Budget and Policy Center, made the following statement in response to President Trump's recent announcements of actions that affect the Affordable Care Act:

"President Trump’s actions in the last two days put the health insurance of over 400,000 Pennsylvanians at risk. It will lead to an increase in health insurance premiums in the marketplaces of over 20%.

"Wednesday the President ordered federal agencies to allow business associations to sell insurance plans that do not meet the essential insurance benefits requirements created under the ACA. This will draw young, healthy people out of the exchanges to buy cheap, junk insurance, insurance that does not cover all medical problems and that has annual and lifetime limits. While that might not directly affect the lives of many people, others will find that terrible accidents or rare illnesses sometimes do afflict young, healthy people and that their insurance does not protect them. At the same time, by allowing these insurance plan to “cherry pick” a less costly population from the larger pool of those seeking insurance, the population securing insurance in the exchanges will be older and sicker and their premiums will dramatically increase.

"Thursday evening, President Trump ordered an immediate end to the cost-sharing reduction payments to those whose incomes are at 250% of the federal poverty line (FPL) or below. This will lead to huge increases in what people with incomes below these levels ($30,150 for an individual and $61,500 for a family of four) pay for insurance. Many will be forced to drop insurance. Again, the result will be that premiums for those who remain in the exchanges will skyrocket, forcing even more to give up their insurance.

"Prior to the President’s actions—and despite continuing uncertainty about what he and the Republican-controlled Congress would do with regard to the ACA—insurance premiums had begun to stabilize in Pennsylvania. Rate increases recently announced an average increase of just 8.8% on the individual market and 6.6% for small group plans. Insurers warned, however, that an end to the cost-sharing reduction payments would lead to an an average premium increase of 20.3%. The combined effect of the two decisions the President has taken may lead premiums to increase even more. (These increases come on top of the lost cost-sharing reduction payments to those with incomes at 250% of the FPL or below.)

In 2016, 439,000 Pennsylvanians received health insurance through the health care exchanges set up under the Affordable Care Act. Over 321,000 received a tax credit and 227,304 received cost-sharing reduction payments. The numbers are certainly higher by now. The insurance of not just those who receive cost-sharing reductions but everyone who purchased health insurance through the exchanges is at risk. President Trump’s actions may well create a death spiral in the individual marketplace as cost increases lead tens of thousands to drop insurance that in turn lead to even higher premiums that lead to even more people giving up insurance. The end result will be that no one except the very rich can afford insurance in the ACA marketplaces. Since they could afford insurance before, the benefit of the ACA for those earning above the Medicaid Expansion cut-off (133% of the FPL) will be eliminated.

"The best hope for the ACA exchanges is legal action to block President Trump’s immediate action to eliminate the cost-sharing payments. (His decision to allow association plans to sell insurance that does not meet ACA requirements, which will be subject to a long process of issuing new regulations that may also become a matter of adjudication.) President Trump is able to take this action because the cost-sharing reduction payments were a matter of legal dispute. Federal courts ruled that the Obama administration was not authorized under law to make those payments. But that decision had been appealed. The courts have authorized other parties, including the Attorneys General of the states, to continue that appeal.

"Court action, however, may not come soon enough to save the ACA marketplaces."

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